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MarketScreener Homepage  >  Equities  >  MUMBAI STOCK EXCHANGE  >  Bharti Airtel Limited    532454   INE397D01024

BHARTI AIRTEL LIMITED

(532454)
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End-of-day quote. End-of-day quote MUMBAI STOCK EXCHANGE - 05/22
593 INR   -0.21%
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India's telecom sector on the ropes after $13 billion levy ruling

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11/28/2019 | 04:24am EDT

India's telecoms sector has been rocked by a Supreme Court ruling last month that sided with the government in a dispute over how levies are calculated, saddling the industry with a combined $13 billion in fresh debt.

Below is a rundown of India's telecoms sector, once the poster child of the country's liberalisation push, and its current woes.

THREE MAJOR CARRIERS

Just three carriers - Vodafone Idea Ltd, Bharti Airtel Ltd and Reliance Jio Infocomm Ltd [RELIB.UL] - serve 90% of the country's 1.18 billion mobile subscribers. Each control about 30% of the market.

Vodafone Idea, a venture between the local unit of Vodafone Group and India's Idea Cellular, is the biggest with more than 370 million subscribers.

Jio, controlled by Asia's richest man Mukesh Ambani, entered the market in 2016, launching a brutal price war that encouraged more consolidation and collapse of smaller mobile operators such as Reliance Communications Ltd, owned by his brother Anil Ambani. It is now the No. 2 mobile carrier.

Bharti Airtel is backed by Singapore Telecommunications Ltd, the biggest shareholder in the Indian mobile carrier with an effective stake of about 35%.

THE CURRENT CRISIS

The Supreme Court overturned a lower court ruling and agreed with the government's definition of adjusted gross revenue (AGR), which has been contested by mobile carriers for over a decade.

Companies argue AGR should comprise just revenue accrued from core services, while the government says AGR should include all revenue, including, for example, money from rent, land sales or sale of scrap.

Indian mobile carriers pay the Department of Telecommunications nearly 3-5% of their AGR in usage charges for spectrum and 8% of AGR as license fees.

The court ruling means companies have to pay not only higher fees to the government, but also clear $13 billion in arrears, penalty and interest payments.

WHAT'S OWED

Vodafone Idea needs to pay more than 283 billion rupees ($3.9 billion) while Airtel owes roughly 216 billion Indian rupees ($3.0 billion) to the Department of Telecommunications. The amounts are due by late January.

In response to cries from the sector for help, the Indian government has deferred upcoming spectrum payments for the next two financial years until March 2022, raising expectations that it may provide more relief.

Those expectations have bolstered the companies' shares, with Bharti Airtel jumping 20.3% since the ruling and Vodafone Idea gaining 4.4%.

A BIG BUT TROUBLED MARKET

Even without the Supreme Court ruling, the market has been tough going for its carriers.

On one hand, the number of India mobile customers has jumped over the past decade to 1.18 billion, making it one of the world's biggest telecoms markets by subscriber numbers.

But average monthly revenue per user, a key metric to gauge operator health is low. It fell to 64.30 rupees as of the second quarter in 2018, the last quarter for which the Cellular Operators Association of India has collated data. That is down more than 80% from 400 rupees in early 2005.

That slide in revenue accelerated after deep-pocketed Jio began offering free voice calls and cut-price data plans - a move that gave millions of low-income Indians internet access but battered rivals as they sought to keep up.

(GRAPHIC: India's mobile operators (Interactive): https://fingfx.thomsonreuters.com/gfx/editorcharts/INDIA-MOBILE/0H001QXKT9JD/index.html)

(GRAPHIC: Dwindling average revenue per user https://fingfx.thomsonreuters.com/gfx/editorcharts/INDIA-MOBILE/0H001QXKX9JQ/eikon.png)

(GRAPHIC: Dwindling average revenue per user (interactive) https://fingfx.thomsonreuters.com/gfx/editorcharts/INDIA-MOBILE/0H001QXKX9JN/index.html)

HUGE LOSSES AND MOUNTING DEBT

Vodafone Idea, which had been barely profitable in the past year, plunged to a 509 billion rupees ($7 billion) consolidated net loss in the end-September quarter, in large part due to provisions for outstanding payments to the government.

Airtel reported a consolidated loss of 230.45 billion rupees in the September quarter, its second consecutive quarter of losses.

In contrast, Jio logged a quarterly consolidated net profit of 9.9 billion rupees.

The bruising price war has also resulted in heavy debt levels. Vodafone Idea's net debt stood at 1.02 trillion rupees as of end-September, while Bharti Airtel's net debt stood at 1.18 trillion rupees.

(GRAPHIC: Reliance Jio profit rises, while others suffer png https://fingfx.thomsonreuters.com/gfx/editorcharts/INDIA-MOBILE/0H001QXKT9JF/eikon.png)

(GRAPHIC: Airtel & Vodafone Idea debt wores (interactive) https://fingfx.thomsonreuters.com/gfx/editorcharts/INDIA-TELCO/0H001QXLD9L2/index.html)

(GRAPHIC: Airtel & Vodafone Idea debt woes https://fingfx.thomsonreuters.com/gfx/editorcharts/INDIA-TELCO/0H001QXLD9L4/eikon.png)

(GRAPHIC: India's wireless subscriber base https://fingfx.thomsonreuters.com/gfx/editorcharts/INDIA-MOBILE/0H001QXKY9JT/eikon.png)

(GRAPHIC: India's wireless subscriber base (interactive) https://fingfx.thomsonreuters.com/gfx/editorcharts/INDIA-MOBILE/0H001QXKY9JR/index.html)

(Reporting by Nallur Sethuraman and Sankalp Phartiyal; Editing by Miyoung Kim and Edwina Gibbs)

By Nallur Sethuraman

Stocks mentioned in the article
ChangeLast1st jan.
BASE CO., LTD. -2.44% 11600 End-of-day quote.43.03%
BHARTI AIRTEL LIMITED -0.21% 593 End-of-day quote.30.10%
CORE CORPORATION 2.86% 1224 End-of-day quote.-15.35%
LETS HOLDINGS GROUP CO., LTD. 2.61% 10.62 End-of-day quote.75.83%
MAJOR HOLDINGS LIMITED 0.00%End-of-day quote.0.00%
NEXT -1.16% 4583 Delayed Quote.-34.70%
RELIANCE COMMUNICATIONS LIMITED -5.88% 0.8 End-of-day quote.-11.11%
RELIANCE INDUSTRIES LTD -0.67% 1431.55 End-of-day quote.-5.45%
SINGAPORE TELECOMMUNICATIONS LIMITED -1.49% 2.65 End-of-day quote.-20.18%
VODAFONE GROUP PLC 0.67% 130 Delayed Quote.-11.42%
VODAFONE IDEA LIMITED -0.90% 5.5 End-of-day quote.-10.57%
WORLD CO., LTD. 4.97% 1393 End-of-day quote.-48.23%
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Financials (INR)
Sales 2020 869 B
EBIT 2020 88 153 M
Net income 2020 -270 152 M
Debt 2020 1 040 B
Yield 2020 0,29%
P/E ratio 2020 -11,1x
P/E ratio 2021 100,0x
EV / Sales2020 4,92x
EV / Sales2021 4,14x
Capitalization 3 234 B
Chart BHARTI AIRTEL LIMITED
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Bharti Airtel Limited Technical Analysis Chart | MarketScreener
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Technical analysis trends BHARTI AIRTEL LIMITED
Short TermMid-TermLong Term
TrendsBullishBullishBullish
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus BUY
Number of Analysts 26
Average target price 681,00 INR
Last Close Price 593,00 INR
Spread / Highest target 51,8%
Spread / Average Target 14,8%
Spread / Lowest Target -23,3%
EPS Revisions
Managers
NameTitle
Gopal Vittal CEO, Managing Director & Executive Director
Sunil Bharti Mittal Chairman
Ajai Puri Chief Operating Officer-India & South Asia Region
Nakul Sehgal Chief Financial Officer
Harmeen Mehta Global Chief Information Officer
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